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FDA says no need to recall Enfamil formula

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The death of one baby, 10-day-old Avery Cornett in Missouri on December 18, is what led chains including Wal-Mart Stores Inc, Walgreen Co and Kroger to pull some cans of Enfamil Newborn from shelves in an effort to protect consumers from Cronobacter, which can cause severe illness in newborns and has been found in powdered milk-based formula.

The death of a second baby, in Florida, was not known until an update from the U.S. Food and Drug Administration and the Centers for Disease Control and Prevention late on Friday following the testing of samples taken from the infected babies' homes and company facilities.

"Parents may continue to use powdered infant formula, following the manufacturer's directions on the printed label," the agencies said in a joint statement.

"We're pleased with the FDA and CDC testing, which should reassure consumers, healthcare professionals and retailers everywhere about the safety and quality of our products," Tim Brown, Mead Johnson's general manager for North America, said in a statement.

Two other babies, one in Illinois and one in Oklahoma, were also reported with infections in recent weeks, but they both recovered.

The agencies said they found Cronobacter in an open container of infant formula, an open bottle of nursery water and prepared infant formula.

They said it was unclear how the contamination occurred, which suggests that it could have happened after the packages were opened. The agencies also said there was no evidence indicating that the infections were related.

"There is currently no evidence to conclude that the infant formula or nursery water was contaminated during manufacturing or shipping," said an FDA spokesman.

These findings basically clear Mead Johnson, whose shares have fallen 10 percent since the issue surfaced, said personal injury and product liability lawyer William Marler of the firm Marler Clark.

"It would be difficult to prove that this formula caused this child's death," said Marler, who has years of experience handling foodborne illness cases, including one in 2009 against Mead Johnson involving Cronobacter. That case was dismissed after no sealed cans tested positive, robbing the prosecution of the proverbial "smoking gun."

Officials for the CDC, Mead Johnson and Wal-Mart could not immediately be reached for comment.

MOVING FORWARD

Mead Johnson's name may be cleared, but the company will likely take some time to fully heal, experts say, given how serious the situation is and how sensitive people are about what they feed their babies.

"Bad news is bad news," said Robert Passikoff, president of research firm Brand Keys Inc. He said the negative publicity has already damaged Enfamil's brand equity and could have cost the company one cycle of new parents, who might feed their children formula for about a year.

Goldman Sachs lowered its earnings estimates for Mead Johnson last week for 2012 through 2014 by 3 percent on average, citing the risk of damage to consumers' trust in the Enfamil brand. It lowered its price target to $74 from $80.

Despite the costs of retesting its formula and the likely hit to earnings from something that is not its fault, Mead Johnson has little legal recourse against either the public health department, the victims' families or Wal-Mart, which pulled its product in the absence of a definite link.

"Could a lawyer cook up legal theories to sue? They can. Would that be a very wise move? I think it would be really, really stupid," Marler said, for two reasons.

"'We didn't know for sure and we wanted to protect our customers' is a pretty good defense," he said, adding that "Suing somebody isn't really the likely way you're going to get your product in their store."

Enfamil is the leading milk-based formula in the United States, controlling nearly 44 percent of the $4.29 billion market, according to Euromonitor International. No. 2 is Abbott Laboratories Inc's Similac, with a 24-percent share, followed by Nestle's Good Start with 10 percent and private label, or store brands, with 9 percent.

Still, the United States makes up less than 30 percent of Mead Johnson's sales, and is not what had been driving the company's shares, said RBC Capital Markets analyst Edward Aaron.

Until its latest troubles, the stock had more than tripled since its February 2009 spin-off from Bristol Myers Squibb, fueled by growth from emerging markets.

In the latest quarter, the company's sales rose 15 percent to $933.9 million, driven by a 30 percent jump in Asia and Latin America.

But Mead Johnson has done many things well in this crisis and should be forgiven quickly, said Mike Rozembajgier, vice president of recalls for Stericycle ExpertRECALL, a consulting and logistics firm.

"There's an understanding by the public that recalls are going to happen," Rozembajgier said. "How forgiving they might be with regard to a particular brand ... comes down to how the company manages the recall."

Mead Johnson has not had a recall, but has gone through many of the same steps, he said, such as working with the government,

being transparent and communicating with retailers and the press.

(Reporting By Martinne Geller in New York and Anna Yukhananov in Boston; Editing by Bob Burgdorfer, Steve Orlofsky, Gary Hill)

Nanosphere says bacterial infection test gets FDA nod

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Nanosphere, which makes diagnostic devices, said the Verigene BC-S test detects Staphylococcus aureus, Staphylococcus epidermidis, and determines antibiotic resistance from the mecA gene within two-and-a-half hours.

Shares of the company were up 20 percent at $1.52 in late afternoon trade on Tuesday on Nasdaq. They earlier touched a high of $1.70.

(Reporting by Shailesh Kuber in Bangalore; Editing by Joyjeet Das)

Chico's shares rise on possible PE buyout report

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A dealReporter.com story suggested that Chico's may be an attractive target for private equity firms, Interactive Brokers Group options analyst Caitlin Duffy wrote in a report on Friday.

Global Markets, however, could not access the report.

Tiburon Research Group analyst Rob Wilson said Chico's, which has seen its sales slow down, might be looking to sell itself before more bad news comes out.

Shares of Fort Myers, Florida-based Chico's were trading at $11.12 in Friday afternoon on the New York Stock Exchange. They had hit a high of $11.23 earlier in the day.

Chico's did not respond to an e-mail and calls seeking comment.

Retailers like Chico's have been forced to increase markdowns to attract customers in a heavily competitive environment, eating into their profits.

Three years ago, the company had set a goal to earn $1 a share for fiscal 2012. However, last month it said that the target would not be met.

For fiscal 2013, it expects to earn $1.50 a share.

"I think (Chico's) made a mistake putting up some very aggressive earnings target out there ... They're certainly not on the trajectory on which they'll be able to achieve their target," analyst Wilson, who thinks $14 a share would be a good price for the company, said.

Interactive Brokers Group's Duffy said call options on the specialty retailer were attracting buyers. She said investors traded more than three times as many calls on Friday compared with Thursday.

In November, the retailer had warned that its margins will remain under pressure as it offers higher discounts to draw shoppers in the holiday season.

(Reporting by Arpita Mukherjee and Ranjita Ganesan in Bangalore; Editing by Viraj Nair)

Two resign from Kodak board; represented KKR

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Both directors - Adam Clammer and Herald Chen - were representatives of private equity firm KKR & Co (KKR.N) on Kodak's board. Kodak said Clammer and Chen notified the company of their resignations on December 21.

The two directors joined Kodak's board in 2009, after KKR bought $300 million of Kodak's senior secured notes and warrants to buy 40 million of the company's shares.

"No reason given. We thank them for their service," Kodak spokesman Christopher Veronda wrote in a brief emailed statement when asked why Clammer and Chen had resigned. A KKR spokeswoman declined to comment.

Bill Brandt, chief executive of turnaround consultant Development Specialists Inc and chair of the Illinois Finance Authority, said there could be two reasons that board members from the same organization would abruptly resign.

"One, they could be about to file bankruptcy. Sometimes if you can see that decision <to file for bankruptcy> coming, you bail before it happens, and avoid having to be part of a directors and officers liability suit. Or, two, KKR may be trying to increase its stake in Kodak or bid on most of its patents. There would be a conflict of interest if KKR was doing that and its representatives stayed on the board," Brandt said.

Kodak has been struggling to cope with the collapse of its film business due to the dominance of digital photography.

Speculation flared in September that Kodak was on the verge of bankruptcy, after the Rochester, New York-based company hired restructuring experts. Last month, Kodak warned that unless it could raise $500 million in new debt or sell some patents in its portfolio, it might not survive 2012.

Kodak's five-year credit default swaps were quoted at distressed levels earlier this month, reflecting a 92 percent chance of default on its debt in the next five years.

(Reporting By Michael Erman; Additional reporting by Greg Roumeliotis and Nick Brown; Editing by Gary Hill)

Momenta shares rise on biosimilars deal with Baxter

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Momenta will receive an upfront payment of $33 million from Baxter for developing up to six biosimilars, and is entitled to additional milestone payments.

The deal also includes Momenta receiving royalties with a profit-share option on four drugs, for which Baxter will cover clinical trials, manufacturing and commercialization, according to Canaccord Genuity analyst Ritu Baral.

The analyst, who has a price target of $23 on Momenta stock, reiterated her "buy" rating.

Momenta and Baxter's deal comes just days after Amgen Inc (AMGN.O) and generic drugmaker Watson Pharmaceuticals Inc (WPI.N) announced a partnership to develop and sell biosimilars of cancer drugs.

Earlier in the month, Samsung announced an agreement with biotechnology company Biogen Idec (BIIB.O) to set up a joint venture for developing, manufacturing and marketing biosimilars.

Biosimilars are copies of existing biotechnology products developed from organic compounds. However, due to the complex nature of these compounds, biosimilars have come under the regulatory scanner.

Companies hoping to cash in on a potential multi-billion dollar market for biosimilars have long awaited guidelines from the U.S. Food and Drug Administration on the development of such drugs.

Analyst Baral said the slew of deals on biosimilars follows increased FDA clarity on the regulatory path.

Shares of Cambridge, Massachusetts-based Momenta were up 4 percent at $17.63 on Friday morning on Nasdaq.

(Reporting by Zeba Siddiqui in Bangalore; Editing by Roshni Menon)

Yue Yuen profit misses forecast, challenges seen

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Chairman Tsai Chi Neng said in a filing to the Hong Kong bourse that the global economic environment in 2012 would remain volatile as recovery was gaining momentum only gradually and consumers in developed economies "may be reluctant to spend and would rather increase their savings."

He added that customers should still be willing to purchase sports footwear and apparel ahead of the UEFA Champions League football competition in June next year and the Olympic Games in August.

Yue Yuen, which makes shoes for New Balance, Nike Inc (NKE.N) and Adidas AG (ADSGn.DE), on Friday posted a $449.8 million profit for the year ended September, down from $479.5 million in the previous year. The result missed a forecast $511.1 million profit from Thomson Global Markets Starmine.

Earnings per shares fell 6.2 percent to 27.28 cents.

Total production volume in 2011 rose 14 percent to 326.6 million pairs of shoes.

Shares of Yue Yuen have fallen about 11 percent this year, versus a 20 percent drop in Hang Seng Index .HSI. The stock was down 0.4 percent early on Friday.

"Despite a drop in earnings, hopes for (industry) consolidation and moderating cost growth in the coming year are expected to make companies like Yue Yuen look more defensive and attractive in the current investment climate," said Ample Finance Group Director Alex Wong.

Yue Yuen's 56.5 percent owned unit Pou Sheng International (Holdings) Ltd (3813.HK), which makes products for Li Ning Co Ltd (2331.HK), ANTA Sports Products Ltd (2020.HK), 361 Degrees International Ltd (1361.HK), XTEP International Holdings Ltd (1368.HK), posted a 152 percent profit gain to $53.7 million, with revenue up 20 percent at $1.6 billion.

RISING COSTS

While group volume and turnover maintained growth momentum, margins came under pressure, "mainly from rising raw materials costs and factory wages," said Tsai.

Yue Yuen said labor costs jumped 38.5 percent during the year and materials costs rose 24.6 percent, with production overheads up 26.6 percent.

Yue Yuen, in which Taiwan-listed parent Pou Chen Corp (9904.TW) holds a 49.98 percent stake, said revenue rose 21.7 percent to $7.05 billion, 28.5 percent of which came from the U.S. market, 21.9 percent from Europe and 28.06 percent from China. Sales in Asia grew 26.2 percent from last year.

Yue Yuen increased production lines by 16.7 percent to 537 during the year, with new factories in China, Indonesia and Vietnam to take advantage of lower costs and more stable labor supplies.

In November, one of Yue Yuen's major factories in the southern Chinese province of Guangdong was hit by a large-scale strike. A spokesman said the company was having difficulty raising wages as it had done in the previous 3-4 years as operational costs increased.

(Editing by Jonathan Hopfner and Chris Lewis)

United Continental shares off on revenue concerns

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United Continental said in a U.S. regulatory filing late on Thursday that it expects consolidated passenger revenue per available seat mile, an important measure called unit revenue, to rise 8.5 percent to 9.5 percent in the fourth quarter.

Helane Becker, an analyst with Dahlman Rose & Co, said her firm had estimated 10 percent growth in quarterly unit revenue.

"We think there are concerns about a recession in Europe," Becker said in an email. Dahlman Rose cut its fourth-quarter profit estimate for United Continental to 25 cents a share from 50 cents a share to account for lower capacity and traffic.

Becker said United would likely benefit in Chicago, Los Angeles and the Atlantic from the restructuring of AMR Corp's (AMR.N) American Airlines, which filed for Chapter 11 protection last month.

James Higgins, an analyst with Ticonderoga Securities, reduced his fourth-quarter profit estimate on United Continental to 16 cents a share from 43 cents a share. Analysts on average, currently expect 46 cents a share, according to Thomson Global Markets I/B/E/S.

In a note to clients, Higgins said exposure to mainland Asia revenue could be creating more revenue uncertainty for United than for other airlines.

"We like the carrier's longer-term prospects but are a bit wary of near-term revenue trends," Higgins wrote.

Most U.S. airlines have posted profits this year, aided by service cuts, higher fares and retirement of less fuel-efficient planes. Still, economic woes loom as a threat to overall demand for air travel.

Last week, Delta Air Lines Inc (DAL.N) said it expects recessionary effects from the euro-zone crisis to weigh on 2012 and said it would cut capacity in Europe by 7 percent.

Shares of United Continental were off 6.7 percent at $18.91 in morning trading as Delta and US Airways Group (LCC.N) also fell. The Arca Airline index .XAL was down 2 percent. AMR Corp was up 4.3 percent to about 60 cents and Southwest Airlines (LUV.N) rose 0.4 percent to $8.43.

(Reporting by Karen Jacobs, editing by Dave Zimmerman)

Verizon ditches $2 fee after customer uproar

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The biggest U.S. wireless operator retracted its decision on Friday, just a day after it announced the fee for one-time payments, which was to have begun January 15.

The consumer victory comes after Bank of America recently decided against a new $5 monthly fee for debit card users after consumers and lawmakers protested the charge.

"There is power in numbers and in the end, the customer is always right," one person said on the Verizon Wireless online forum. "How can any corporation expect to keep business by doing that? It's pure greed just like with Bank of America."

Verizon said it listened to its customers and made the decision based on customer input after many complained and some threatened to leave the service if the fee was instituted.

A spokesman said that the company had just wanted to encourage consumers to pay their bills via different methods such as autopay, where they give Verizon permission to charge their credit card or bank account automatically each month.

Verizon Wireless is a venture of Verizon Communications Inc and Vodafone Group Plc.

The quick turn-around came after little more than a day of complaints, but not before the U.S. Federal Communications Commission said it was "concerned" about the fee and that it was looking into it.

"On behalf of American consumers, we're concerned about Verizon's actions and are looking into the matter," an official for the FCC said earlier on Friday.

The prospect of a $2 fee created a flurry of online activity and one consumer organization, Change.org, said 95,000 people joined a campaign on its website urging Verizon to drop the fee.

"The era of corporations walking roughshod over consumers without consequence is officially over," Ben Rattray, chief executive of Change.org, said in a statement.

Verizon Wireless customers told the company, often in colorful language, that they would not put up with the fee.

"If this fee goes through, I will be taking my business elsewhere!!!" one person said on the Verizon Wireless website.

Another said "Victory is ours!" after the about-face.

The turnaround comes after another high-profile reversal of course earlier this year by video rental service Netflix Inc in the face of customer disgust.

In October it canceled plans to split its DVD rental service from its online streaming service. The move would have forced customers of both streaming and DVD options to visit different websites and maintain different accounts for each subscription.

The Verizon Wireless incident served to highlight fee practices elsewhere in the communications industry. Rivals AT&T Inc and Sprint Nextel said on Friday that they charge some customers $5 for bill payments, revising their comments from the day before.

AT&T and Comcast Corp say that they charge some customers who look for personal assistance in paying their bills but that they do not charge for online payments. Sprint said it charges customers with bad credit if they refuse to enroll for auto pay.

The Sprint and AT&T fees are even higher than Verizon's proposed levy at $5 per transaction. Comcast's payment fee, which is only levied in some states, is $5.99.

The FCC did not comment on whether it would look into other companies' fee policies for bill payment.

(Reporting By Sinead Carew; Additional reporting by Lisa Richwine in Los Angeles; Editing by Tim Dobbyn)

Amazon shares dip on growth concerns

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Goldman Sachs analysts said in a note from Wednesday that Amazon has typically bested overall online sales growth by 23 points.

comScore reported earlier this week that online holiday spending in the U.S. rose 15 percent to a record $35 billion from November 1 to December 26, versus the comparable period last year.

That would suggest a 38 percent increase in Amazon sales this season, below the 40 percent increase Wall Street expects, wrote Goldman, which expects 44 percent, including Kindle sales.

"While the comScore numbers are just one data point which does not capture international sales or breakout individual companies' sales, taken alone they seem to suggest the potential for downside risk to consensus forecasts for 4Q 2011," the analysts said.

Shares of Amazon fell as low as $166.97 in early trading on Thursday, the lowest level since late March. The stock recovered by midday to $173, down 0.5 percent.

Amazon shares reached almost $250 in October, but have dropped by about 30 percent since then. Shares of rival e-commerce company eBay have lost roughly 10 percent in the same period.

Amazon said on Thursday it has sold "well over" 1 million Kindle e-reader and tablet devices per week this month.

Goldman's 44 percent sales growth forecast for the fourth quarter, versus a year earlier, includes three to four percentage points of growth from Kindle device sales that the analysts said are not currently incorporated in Wall Street consensus estimates.

(Reporting By Phil Wahba and Alistair Barr; editing by Mark Porter and Tim Dobbyn)

Diamond Foods gains on rumors of Einhorn investment

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When contacted, Einhorn, who runs hedge fund Greenlight Capital Inc, declined to comment. Diamond Foods also declined to

comment.

"For people who are long (on) Diamond stock, it would be a good thing... If someone takes a large stake who is a well regarded investor, others tend to follow like lemmings," said an investor, who did not want to be identified.

The rumors come at a time when the U.S. Securities and Exchange Commission is probing the snack maker's accounting of payments to walnut growers.

Diamond's stock has lost more than half its value since it first announced an internal probe into the matter. It fell to its lowest level in two years after the SEC announced its probe earlier this month.

The probes center on allegations that Diamond delayed payments to farmers to make its earnings for the fiscal year ended July 31 look better while it negotiated to buy Pringles from Procter & Gamble (PG.N).

The maker of Emerald nuts, Kettle potato chips and Pop Secret popcorn, which agreed to buy the snacks foods brand for $1.5 billion in April, has since delayed the acquisition.

Einhorn was in the news recently after he cast doubt on Green Mountain Coffee Roasters' (GMCR.O) accounting practices and long-term earnings power.

Shares of Diamond were trading up 9 percent at $32.04 on Thursday on Nasdaq. They earlier touched a high of $33.36.

(Reporting by Chris Jonathan Peters & Arpita Mukherjee in Bangalore; Editing by Viraj Nair and Joyjeet Das)